Enron Lowers Forecast for Fourth Quarter

Troubled Enron Corp., which last week agreed to be acquired by rival Dynegy Inc., said Wednesday that severance payments, reorganization costs and a drop in its energy trading business will lower fourth-quarter earnings.

Enron did not say how many jobs it plans to cut or what its expenses would be. Trading volumes declined last week, Chief Operating Officer Greg Whalley said , but it is too soon to tell whether the company will recover lost business.

“Business has been affected in the last month,” Enron Chief Executive Kenneth L. Lay said. “We’re going to go back to basics and focus on our core energy business.”

The company will provide a more detailed fourth-quarter earnings projection in two or three weeks, Lay said.

Dynegy CEO Charles L. Watson, who agreed Friday to acquire bigger rival Enron in a stock transaction valued at more than $10 billion, had said he is confident that Enron’s trading business is sound.

Enron has been criticized by investors for not providing enough information about how it makes its money. The firm was expected to earn 45 cents a share in the fourth quarter, the average estimate of analysts polled by Thomson Financial/First Call.

Enron said it received $1.5 billion in cash Tuesday from ChevronTexaco Corp., which owns about 27% of Dynegy, as part of the buyout agreement.

Shares of Enron rose 2 cents to $10, Dynegy fell 74 cents to $46.20, and ChevronTexaco declined $2.85 to $86.62, all on the New York Stock Exchange.